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Labor

Outrageous Bonuses for Federal Workers

Research & Commentary
February 02, 2012

by Salvatore Babones

Members of the US House of Representatives — Republicans and Democrats alike — seems to think that federal workers are overpaid.  They voted 309-117 to freeze the salaries of federal workers through December 2013.  Those voting in favor of the freeze included 237 Republicans and 72 Democrats.

Federal worker pay has already been frozen for 2011 and 2012.  Meanwhile consumer prices rose on average 3.0% in 2011.  The Federal Reserve Board’s target inflation rate for 2012 and 2013 is 2.0%.  That means that real federal worker wages have fallen 3.0% already and will fall a further 2.0% this year.

If the House of Representatives gets its way, real federal worker pay will fall a cumulative 7.0% in real terms by the end of 2013.

President Obama, on the other hand, is asking for a 0.5% raise for federal workers in 2013.  Even under the “socialist” Obama plan, federal workers will take a 6.5% cumulative cut in real pay by the end of 2013.

To put this in perspective, top corporate executive pay rose, on average, 36.5% in 2010 alone.  Figures for 2011 are not yet available.

[pullquote]Even under the “socialist” Obama plan, federal workers will take a 6.5% cumulative cut in real pay by the end of 2013.[/pullquote]

Leaving aside corporate executives, there’s one big reason why federal worker pay shouldn’t go down in a recession: it doesn’t go up in a boom.

Many private sector professionals got great raises and big bonuses in 2006 and 2007.  No one except executives and bankers is getting a bonus this year, but base salaries still reflect those historical increases.  Pay goes up in good times and stagnates in bad times.

Bonuses for federal workers in 2006?  0.0%.  Bonuses for federal workers in 2007?  0.0%.  Raises for federal workers in those two years?  Less than inflation.  Federal workers live in the Realonomy with the rest of us, not in the Plutonomy of the bankers and executives.

In fact, federal worker pay for any given position has never risen more than 4.8% in a single year since 1980.  Back in 1980 it rose 9.1%.  Consumer prices that year rose 13.4%.

When federal workers start getting outrageous bonuses in good times, it’ll be fair to freeze their pay in bad times.  Until then, it simply isn’t.  Share the wealth, share the pain.  Don’t, don’t.

Bonuses for federal workers might be a good idea, but I don’t expect to see them in my lifetime.

The people who want to cut federal worker pay — and this includes the President, who has effectively supported a 6.5% cut in real pay over three years — justify the cuts by pointing to the budget deficit.  They say there’s no money.

As executive and banker bonuses show, the money is there.

[pullquote]When federal workers start getting outrageous bonuses in good times, it’ll be fair to freeze their pay in bad times.[/pullquote]

In actual dollars (not adjusted for inflation) US gross domestic product (GDP) rose 4.2% in 2010 and 3.9% in 2011.  If these gains had been distributed absolutely equally throughout the economy, federal workers should have received raises of 4.2% in 2010 and 3.9% in 2011.  They got 0.0% and 0.0%.

Someone is getting the raises.  Those GDP increases went somewhere.  They didn’t disappear into thin air or get exported to China.  They represent the increase in US national income after all those payments to China.

The truth is that it’s not about the availability of money.  It’s about the distribution of money.  For bankers and executives in the Plutonomy to get 20% and 30% raises, someone in the Realonomy has to get no raise at all.  Lately, that someone has been the federal worker.

People, it’s not that hard.  You don’t need calculus, a Ph.D., or a background in macroeconomics.  The economy grew 4.2% in 2010 and 3.9% in 2011.  Where are the federal worker raises?  Where are your raises?

Ask the bankers and executives.  Ask your boss.  Don’t balance the budget on the backs of federal workers.  Maybe you’ve had things even worse than them, but that’s not their fault.  Blame the people who got the outrageous bonuses, not the people who didn’t.

Topics
Labor,
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